Quarterly report pursuant to Section 13 or 15(d)

Short-term and Long-term Investments, Restricted Deposits

v3.22.1
Short-term and Long-term Investments, Restricted Deposits
3 Months Ended
Mar. 31, 2022
Investments, Debt and Equity Securities [Abstract]  
Short-term and Long-term Investments, Restricted Deposits Short-term and Long-term Investments, Restricted Deposits
Short-term and long-term investments and restricted deposits by investment type consist of the following ($ in millions):
  March 31, 2022 December 31, 2021
  Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized Losses
Fair
Value
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized Losses
Fair
Value
Debt securities:
U.S. Treasury securities and obligations of U.S. government corporations and agencies
$ 552  $ —  $ (9) $ 543  $ 642  $ —  $ (2) $ 640 
Corporate securities 8,752  26  (368) 8,410  8,145  130  (75) 8,200 
Restricted certificates of deposit
—  —  —  — 
Restricted cash equivalents
262  —  —  262  96  —  —  96 
Short-term time deposits
130  —  —  130  109  —  —  109 
Municipal securities 3,607  13  (136) 3,484  3,398  85  (15) 3,468 
Asset-backed securities 1,308  —  (29) 1,279  1,308  (5) 1,308 
Residential mortgage-backed securities
919  (45) 875  850  10  (7) 853 
Commercial mortgage-backed securities
939  (43) 897  870  13  (10) 873 
Equity securities (1)
301  —  —  301  326  —  —  326 
Private equity investments
626  —  —  626  587  —  —  587 
Life insurance contracts
196  —  —  196  186  —  —  186 
Total $ 17,596  $ 41  $ (630) $ 17,007  $ 16,521  $ 243  $ (114) $ 16,650 
(1) Investments in equity securities primarily consist of exchange traded funds in fixed income securities.

The Company's investments are debt securities classified as available-for-sale with the exception of equity securities, certain private equity investments and life insurance contracts. The Company's investment policies are designed to provide liquidity, preserve capital and maximize total return on invested assets with the focus on high credit quality securities. The Company limits the size of investment in any single issuer other than U.S. treasury securities and obligations of U.S. government corporations and agencies. As of March 31, 2022, 98% of the Company's investments in rated securities carry an investment grade rating by nationally recognized statistical rating organizations. At March 31, 2022, the Company held certificates of deposit, equity securities, private equity investments and life insurance contracts, which did not carry a credit rating. Accrued interest income on available-for-sale debt securities was $101 million and $96 million at March 31, 2022 and December 31, 2021, respectively, and is included in other current assets on the Consolidated Balance Sheets.

The Company's residential mortgage-backed securities are primarily issued by the Federal National Mortgage Association, Government National Mortgage Association or Federal Home Loan Mortgage Corporation, which carry implicit or explicit guarantees of the U.S. government. The Company's commercial mortgage-backed securities are primarily senior tranches with a weighted average rating of AA and a weighted average duration of 4 years at March 31, 2022.
The fair value of available-for-sale debt securities with gross unrealized losses by investment type and length of time that individual securities have been in a continuous unrealized loss position were as follows ($ in millions):
  March 31, 2022 December 31, 2021
  Less Than 12 Months 12 Months or More Less Than 12 Months 12 Months or More
  Unrealized Losses Fair
Value
Unrealized Losses Fair
Value
Unrealized Losses Fair
Value
Unrealized Losses Fair
Value
U.S. Treasury securities and obligations of U.S. government corporations and agencies
$ (7) $ 495  $ (2) $ 33  $ (2) $ 598  $ —  $
Corporate securities (271) 5,653  (97) 1,024  (66) 4,209  (9) 209 
Municipal securities (125) 2,336  (11) 121  (14) 1,173  (1) 39 
Asset-backed securities (28) 1,097  (1) 65  (5) 770  —  33 
Residential mortgage-backed securities (29) 629  (16) 172  (7) 472  —  15 
Commercial mortgage-backed securities (27) 680  (16) 139  (8) 380  (2) 32 
Total $ (487) $ 10,890  $ (143) $ 1,554  $ (102) $ 7,602  $ (12) $ 331 

As of March 31, 2022, the gross unrealized losses were generated from 5,048 positions out of a total of 6,748 positions. The change in fair value of available-for-sale debt securities is primarily a result of movement in interest rates subsequent to the purchase of the security.

For each security in an unrealized loss position, the Company assesses whether it intends to sell the security or if it is more likely than not the Company will be required to sell the security before recovery of the amortized cost basis for reasons such as liquidity, contractual or regulatory purposes. If the security meets this criterion, the decline in fair value is recorded in earnings. The Company does not intend to sell these securities prior to maturity and it is not likely that the Company will be required to sell these securities prior to maturity; therefore, the Company did not record an impairment for these securities.

In addition, the Company monitors available-for-sale debt securities for credit losses. Certain investments have experienced a decline in fair value due to changes in credit quality, market interest rates and/or general economic conditions. The Company recognizes an allowance when evidence demonstrates that the decline in fair value is credit related. Evidence of a credit related loss may include rating agency actions, adverse conditions specifically related to the security, or failure of the issuer of the security to make scheduled payments.

The contractual maturities of short-term and long-term debt securities and restricted deposits are as follows ($ in millions):
  March 31, 2022 December 31, 2021
  Investments Restricted Deposits Investments Restricted Deposits
  Amortized
Cost
Fair
Value
Amortized
Cost
Fair
Value
Amortized
Cost
Fair
Value
Amortized
Cost
Fair
Value
One year or less $ 1,543  $ 1,540  $ 611  $ 609  $ 1,390  $ 1,396  $ 368  $ 368 
One year through five years 6,519  6,327  400  382  6,212  6,294  460  457 
Five years through ten years 3,903  3,665  238  219  3,647  3,681  244  243 
Greater than ten years 93  91  —  —  73  78  —  — 
Asset-backed securities 3,166  3,051  —  —  3,028  3,034  —  — 
Total $ 15,224  $ 14,674  $ 1,249  $ 1,210  $ 14,350  $ 14,483  $ 1,072  $ 1,068 
 
Actual maturities may differ from contractual maturities due to call or prepayment options. Equity securities, private equity investments and life insurance contracts are excluded from the table above because they do not have a contractual maturity. The Company has an option to redeem at amortized cost substantially all of the securities included in the greater than ten years category listed above.